Opinion
Case No. 02-83984-SSM, Jointly Administered
December 16, 2002
John Wm. Butler, Jr., John K. Lyons, SKADDEN, ARPS, SLATE, MEAGHER FLOM, Chicago, Illinois, Lawrence E. Rifken, Douglas M. Foley, McGUIREWOODS LLP, McLean, Virginia, for Debtors and Debtors-in-Possession.
Agreement and Order (this "1110 Agreement"), provided that the parties execute final documentation consistent with the term sheet attached hereto as Exhibit A (the "Term Sheet") no later than the date upon which the Debtors consummate a plan of reorganization (the "Final Documents" and, together with the Term Sheet, the "Final Agreement"), stipulate and agree as follows:
1. On August 11, 2002 (the "Petition Date"), the Debtor filed its voluntary petition in this Court for reorganization relief under chapter 11 of the Bankruptcy Code. The Debtor continues to operate its businesses and manage its properties as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
2. The Debtor represents that it holds an air carrier operating certificate issued pursuant to chapter 447 of title 49, U.S. Code, for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo, and is engaged in domestic and international scheduled air transportation in North America, the Caribbean and Europe.
3. The Debtor and the Aircraft Creditor are parties to certain aircraft leases, security agreements or conditional sale contracts, as amended by the parties (collectively, the "Aircraft Agreements"). Pursuant to the Aircraft Agreements, the Debtor leases, has granted a security interest in or conditionally purchased the aircraft listed on Exhibit B hereto, together with engines, appliances and related parts and equipment (such property, including all technical records and documents relating thereto, the "Aircraft Equipment"). The Aircraft Equipment constitutes "equipment" within the meaning of sections 1110(a)(3)(A)(i) and 1110(a)(3)(B) of the Bankruptcy Code and, together with the Aircraft Agreements, is subject to the provisions of section 1110 of the Bankruptcy Code.
4. The Debtor represents that: (a) the Aircraft Equipment has been in the possession of the Debtor, and the Debtor has continued to use the Aircraft Equipment since August 11, 2002 in the operation of its business; (b) the Aircraft Equipment is essential to the continued operation and viability of the Debtor; and (c) it believes that the 1110 Agreement is beneficial to and in the best interests of the Debtor, its creditors and its estate.
5. The Aircraft Creditor is entitled to section 1110 of the Bankruptcy Code protections with respect to the Aircraft Equipment and the Aircraft Agreements.
6. The parties hereby agree that the Debtor shall make payments and perform certain other acts as set forth in the Term Sheet. The parties further agree that such payment and actions shall be deemed sufficient (a) to constitute performance of all obligations under the Aircraft Agreements within the meaning of section 1110(a)(2)(A) of the Bankruptcy Code and (b) to cure all defaults under the Aircraft Agreements (other than defaults of the kind specified in section 365(b)(2) of the Bankruptcy Code) within the requirements of section 1110(a)(2)(B) of the Bankruptcy Code (the "Cure Payments"). The Cure Payments will be made upon execution of the Final Documents.
7. The parties hereby agree and acknowledge that this 1110 Agreement does not constitute an assumption of the Aircraft Agreements under section 365(a) of the Bankruptcy Code (to the extent such section is applicable) and nothing contained herein shall be construed to constitute such an assumption. The preceding sentence does not otherwise limit or affect the rights, remedies, or claims of the Aircraft Creditor or the Debtor under this 1110 Agreement or section 1110 of the Bankruptcy Code.
8. In accordance with section 1110(c) of the Bankruptcy Code, upon written demand, the Debtor will surrender and return Aircraft Equipment and the Aircraft Agreement controlling the relevant Aircraft Equipment will be deemed rejected upon such surrender and return; provided, however, that nothing in this 1110 Agreement shall modify, abridge or otherwise affect the rights of the Debtor if permitted by law or the Aircraft Creditor if permitted by law under any order of the Bankruptcy Court entered in their chapter 11 cases.
9. This 1110 Agreement is an agreement within the meaning of section 1110(a)(2)(A) of the Bankruptcy Code. In the event the Debtor fails to perform any of its obligations under this 1110 Agreement or under the Aircraft Agreements, such failure shall constitute an event of default under this 1110 Agreement and the Aircraft Agreements unless cured in compliance with the terms of the agreements if cure is permitted thereunder. Upon the occurrence of such an event of default, (a) the Aircraft Creditor shall thereupon be permitted to exercise any and all rights, claims, and remedies with respect thereto as it may have under the relevant Aircraft Agreement and the Bankruptcy Code as permitted by section 1110 of the Bankruptcy Code and (b) upon written demand by the Aircraft Creditor, the Debtor shall surrender and return the Aircraft Equipment (including its records and all related equipment) as required by section 1110 of the Bankruptcy Code.
10. The Aircraft Creditor reserves its right to file any proof of claim and to apply to the Court for any order appropriate under the Code, subject to any objection of the Debtor, the Committee or any party-in-interest.
11. This Stipulation shall be binding upon (a) the Debtor, and any trustee or examiner in the pending chapter 11 case, or their respective successors and assigns, (b) the Aircraft Creditor and its respective successors and assigns, (c) the trustee in the event that the above-captioned case is converted to a case under chapter 7 of the Code and (d) all creditors and other parties-in-interest in this case.
12. This 1110 Agreement is subject to the final approval of the Court and, upon such approval, shall be effective as of October 9, 2002. The Debtor shall promptly cause this 1110 Agreement to be presented to the Court for approval in accordance with the Amended Order Pursuant to 11 U.S.C. § 102 and 105(a), Bankruptcy Rules 2002(m) and 9007, and Local Bankruptcy Rules 2002-1 and 9013-1 Establishing Omnibus Hearing Dates and Certain Notice, Case Management and Administrative Procedures entered on August 13, 2002.
13. This 1110 Agreement may be executed in one or more counter-parts, by facsimile or otherwise, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same document.
14. This 1110 Agreement, the Final Agreement, section 1110 of the Bankruptcy Code and the Aircraft Agreements, as modified hereby, together contain the entire agreement between the Aircraft Creditor and the Debtor as to the subject matter hereof, and all previous understandings, agreements and communications prior to the date hereof, whether express or implied, oral or written, relating to the subject matter hereof are fully and completely extinguished and superseded by this 1110 Agreement and the Aircraft Agreements as modified hereby. This 1110 Agreement shall not be altered, amended, modified or otherwise changed, and no right hereunder may be waived, except by a writing duly signed by the Aircraft Creditor and the Debtor. The terms and conditions set forth in the Aircraft Agreements shall continue to be binding upon and performed by the Debtor except as and to the extent otherwise expressly provided in this 1110 Agreement.
15. To the extent non-bankruptcy law governs any provision of this 1110 Agreement, this 1110 Agreement shall be interpreted, and the rights and duties of the parties hereto shall be determined, in accordance with the laws of the State chosen by the Debtor and the Aircraft Creditor in the Aircraft Agreements.
16. Unless otherwise specifically provided herein, all notices required or permitted by the terms of the Aircraft Agreements or this 1110 Agreement shall be in writing, and any such notice shall become effective upon receipt by the addressee of such notice by certified mail, return receipt requested, overnight courier service or facsimile to the following addresses:
(A) If to the Debtor:
Piedmont Airlines, Inc. 2345 Crystal Drive Arlington, VA 22227 Telephone: (703) 872-7000 Facsimile: (703) 872-5252 Attn: Howard L. Wu, Esq.
andSkadden, Arps, Slate, Meagher Flom (Illinois) 333 West Wacker Drive, Suite 2100 Chicago, IL 60606-1285 Telephone: (312) 407-0700 Facsimile: (312) 407-0411 Attn: John K. Lyons, Esq.
(B) If to the Aircraft Creditor, then as provided in the Aircraft Agreements and to its counsel filing Notice of Appearance herein.
17. The parties agree that they shall promptly execute such documents and instruments and take such other actions, including to the extent appropriate, filing of documents as are reasonably necessary or appropriate to amend or supplement the Aircraft Agreements to conform to and to reflect the terms of this 1110 Agreement, the Term Sheet or the Final Documents. However, unless and until amendments or supplements to the Aircraft Agreements are executed or other actions taken, this 1110 Agreement shall be deemed to amend and supplement the Aircraft Agreements.
18. To the extent there is an inconsistency between the terms of this 1110 Agreement and the terms of the Aircraft Agreements, as amended, the terms of the Aircraft Agreements, as amended, shall control.
19. To the extent that there is an inconsistency between the terms of this 1110 Agreement and any provision of the Order Authorizing Entry Into 1110 Agreements and Stipulations Extending Time to Comply With Section 1110 of the Bankruptcy Code, or between the terms of this 1110 Agreement and any term of the Debtors' Motion with respect to the above-referenced Order, the terms of this 1110 Agreement shall control.
20. To the extent there is an inconsistently between the terms of this 1110 Agreement or the terms of the Aircraft Agreements, as amended, and any term of the Final Documents, the terms of the Final Documents shall control.
Dated: December 2, 2002 U.S. AIRWAYS GROUP, INC., et al., McLean, Virginia By Counsel:
John Wm. Butler, Jr. John K. Lyons SKADDEN, ARPS, SLATE, MEAGHER FLOM (ILLINOIS) 333 W. Wacker Drive, Suite 2100 Chicago, Illinois 60606-1285 (312) 407-0700
and
/s/ Douglas M. Foley Lawrence E. Rifken (VSB No. 29037) Douglas M. Foley (VSB No. 34364) McGUIREWOODS LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 (703) 712-5000
Attorneys for Debtors and Debtors-in-Possession
Dated: December 5, 2002 VIACOM INC. New York, New York By Counsel:
By: /s/ Douglas R. Davis Douglas R. Davis PAUL, WEISS, RIFKIND, WHARTON GARRISON 1285 Avenue of the Americas New York, New York 10019 (212) 373-3000
Attorneys for Viacom Inc.
This Court having determined that the approval requested in this Agreement is in the best interests of the Debtor, its estates, and creditors; and it appearing that proper and adequate notice has been given and that no other or further notice is necessary; and upon the record herein; and after due deliberation thereon; and good and sufficient cause appearing therefor,
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
21. The 1110 Agreement is APPROVED in its entirety.
22. The Debtor is authorized to perform all obligations under the Aircraft Agreements in accordance with section 1110 of the Bankruptcy Code and to take all actions necessary to effectuate the terms thereof.
23. The Debtors are hereby authorized to enter into the Final Documents substantially on the terms of the Term Sheet attached hereto without further order of this Court.